Voyager Digital Holdings, Inc. – Designates FTX ($1.4bn Bid) as Winning Bidder at Auction with Claims Against 3AC to Stay with Debtors’ Estates, October 19th Sale Hearing Set

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September 27, 2022 – Further to an August 5th bidding procedures order [Docket No. 248, the Debtors designated crypto exchange West Realm Shires Inc. (“FTX US”) as the successful bidder at an auction for substantially all of their assets which began on September 13th [Docket No. 457]. The Debtors and FTX US have committed to entering into an asset purchase agreement "as soon as reasonably practicable" with a sale hearing scheduled for October 19th (at which the Court will also consider the adequacy of a to be filed revised Disclosure Statement).

UPDATE: On September 28, 2022, the Debtors filed a motion to authorize entry into the $1.4bn asset purchase agreement (the “APA”) with West Realm Shires Inc. (“FTX US” or the “Purchaser”) for substantially all of their assets [Docket No. 472]. The APA is attached as Exhibit B to the motion. Objections to the sale motion are due by October 12, 2022.

As noted below, the purchase price is largely comprised of value ascribed to the Debtors' cryptocurrency "which at current market prices is estimated to be $1.311 billion" although further details as to that estimate (eg exact dates in highly fluctuating markets and/or the composition of the Debtors' cryptocurrency assets) are not provided. We look forward to a recap of the bidding and any valuation advice provided to the Debtors' Board from investment bankers Moelis & Company LLC. Objections to the proposed sale are due by October 12th and, notwithstanding the apparent support of the proposed sale by the Debtors' creditors' committee, that valuation is likely to come under intense scrutiny.

On September 20th, the Debtors notified the Court that they had delayed a sale hearing from September 29th until October 19th. Without citing sources, the WSJ (amongst others) reported that the Debtors were considering a pair of substantially similar bids from FTX US and and rival crypto exchange Binance with "the current bid from Binance…about $50 million, slightly higher than the competing bid from FTX."

On July 24th, the Debtors (via counsel Kirkland & Ellis) emphatically rejected an offer from FTX US (controlled by Sam Bankman-Fried's Alameda Ventures Ltd.) as both a "clear and intentional subversion of the bankruptcy process" and "nothing more than a liquidation of cryptocurrency on a basis that advantages AlamedaFTX. It’s a low-ball bid dressed up as a white knight rescue…."

Auction Results Press Release

In a press release announcing the auction result, the Debtors stated: “…after multiple rounds of bidding in a highly competitive auction process that lasted two weeks, its operating company Voyager Digital LLC, selected West Realm Shires Inc. ("FTX US") as the highest and best bid for its assets. The Official Committee of Unsecured Creditors ("UCC") participated actively in the competitive auction and supports FTX US's winning bid. 

FTX US’s bid is valued at approximately $1.422 billion, comprised of (i) the fair market value of all Voyager cryptocurrency at a to-be-determined date in the future, which at current market prices is estimated to be $1.311 billion, plus (ii) additional consideration that is estimated as providing approximately $111 million of incremental value. The Company’s claims against Three Arrows Capital remain with the bankruptcy estate, which will distribute any available recovery on such claims to the estate’s creditors.

FTX US’s bid maximizes value and minimizes the remaining duration of the Company’s restructuring by providing a clear path forward for the Debtors to consummate a chapter 11 plan and return value to their customers and other creditors. FTX US’s market-leading, secure trading platform will enable customers to trade and store cryptocurrency after the conclusion of the Company’s chapter 11 cases.”

Petition Date Perspective (as previously reported)


  • Crypto-Currency Broker Files for Bankruptcy with Over $1.0bn in Liabilities and 100,000 creditors (ie Acount Holders)
  • Cites "Implosion" of Terra and Three Arrows Capital (3AC) as Pushing  "Cryptocurrency Winter" into "Cryptopocalyse
  • In Recent 12-Month Stretch Lent $5.15bn of Cryptocurrency (Deposited by Account Holders), Including $650mn to 3AC
  • Will Pursue Claims of $650mn Against 3AC
  • Lender Alameda Set to Recover Nothing on $75.0mn Claim
  • Prepetition Sales Efforts Stumble and Then Collapse After July 1st Decision to Put Debtors into "Maintenance Mode" (ie freeze accounts)
  • Absent Arrival of Sponsor/Buyer, Chapter 11 Plan Has Account Holders Receiving 100% of New Equity in Coins/New Equity/VGX Tokens/3AC Loan Recovery Mix

Petition Date Press Release

In a press release announcing the filing, the Debtors stated: "The proposed Plan of Reorganization (Plan) would, upon implementation, resume account access and return value to customers. Under this Plan, which is subject to change given ongoing discussions with other parties, and requires Court approval, customers with crypto in their account(s) will receive in exchange a combination of the crypto in their account(s), proceeds from the 3AC recovery, common shares in the newly reorganized Company, and Voyager tokens. The plan contemplates an opportunity for customers to elect the proportion of common equity and crypto they will receive, subject to certain maximum thresholds.

The Company continues to evaluate all strategic alternatives to maximize value for stakeholders.

The Company has over $110 million of cash and owned crypto assets on hand, which will provide liquidity to support day-to-day operations during the Chapter 11 process, in addition to more than $350 million of cash held in the For Benefit of Customers (FBO) account at Metropolitan Commercial Bank. Voyager also has approximately $1.3 billion of crypto assets on its platform, plus claims against Three Arrows Capital (“3AC”) of more than $650 million.

Voyager previously announced that its subsidiary, Voyager Digital LLC, issued a notice of default to 3AC for failure to make the required payments on its previously disclosed loan of 15,250 BTC and $350 million USDC. Voyager is actively pursuing all available remedies for recovery from 3AC, including through the court-supervised processes in the British Virgin Islands and New York."

Stephen Ehrlich, the Debtors'Chief Executive Officer, noted: “This comprehensive reorganization is the best way to protect assets on the platform and maximize value for all stakeholders, including customers….While I strongly believe in this future, the prolonged volatility and contagion in the crypto markets over the past few months, and the default of Three Arrows Capital (3AC) on a loan from the Company’s subsidiary, Voyager Digital, LLC, require us to take deliberate and decisive action now. The chapter 11 process provides an efficient and equitable mechanism to maximize recovery.”

The Debtors also announced the appointment of four new independent directors.

Goals of the Chapter 11 Filings

The Debtors provide [Docket No. 15]: "…this is not a “free-fall” filing without direction. On the contrary, Voyager has a path forward and a plan to swiftly bring these chapter 11 cases to an appropriate conclusion. Voyager’s proposed chapter 11 plan of reorganization…contemplates a standalone restructuring that the Company can effectuate without a sale or a strategic partner. The Company will continue a robust marketing process—one that was already underway prepetition—to test the value proposition of the Company’s business. This process is designed to position Voyager for success in a turbulent market environment, allowing the Company to support go-forward operations and preserve the value of its customers’ assets."

Plan Summary

The Ehrlich Declaration (defined below) provides: "Under the Plan, account holders will receive a combination of (i) coins, (ii) new common shares in reorganized Voyager, (iii) existing VGX tokens, (iv) and any recovery on account of the 3AC Loan. Account holders can also elect to increase or decrease their pro rata recovery of equity in reorganized Voyager in exchange for an equal increase or decrease in the amount of coins such account holder is entitled to. Ultimately, the standalone restructuring will provide account holders with a meaningful recovery on account of their claims and vest ownership of the goforward business of the Company in its customers.

The Plan effectively functions as a “stalking horse” proposal. The Company will continue discussions with strategic third-party investors to solicit interest in sponsoring the Plan or otherwise providing financing to Voyager in exchange for partial or full ownership of the reorganized Company. Ultimately, pursuing the standalone restructuring and a marketing process in tandem will allow the Company to consummate the most value-maximizing transaction available.

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